#MacroWatchFedChairPick

Jerome Powell’s term as Federal Reserve Chair ends in May 2026, and the race to succeed him has become a major macro story. President Trump is expected to announce his choice early this year, and several candidates each with very different monetary policy philosophies are being discussed. The Fed’s leadership matters more than ever given ongoing inflation pressures, slowing growth indicators, and market sensitivity to policy moves.
Potential frontrunners include:

Kevin Hassett White House economic adviser, known for dovish views and advocating significant rate cuts.
Christopher Waller Fed governor with a more technocratic reputation, supporting cautious rate cuts when data allows.
Kevin Warsh Former Fed governor, historically hawkish but showing flexibility in response to growth concerns.

Other potential candidates include governors like Michelle Bowman or James Bullard, with varying hawkish/dovish leanings.
Favored Candidate: Christopher Waller (Most Balanced & Pragmatic)
If I had to pick one candidate whose stance best fits the current macro backdrop, it would be Christopher Waller.
Why

He is data-driven, open to measured rate cuts as the economy slows, yet willing to act against inflation if it accelerates.
His track record shows flexibility supporting tightening during inflation spikes and easing cautiously when conditions soften.

This approach helps preserve Fed credibility on inflation while addressing weakening growth signals.
In the current environment inflation above target in certain sectors, a softening labor market, and persistent market volatility this balance is critical.
Alternative Candidate: Kevin Hassett (Dovish, Growth-Focused)
Pros
Aggressive rate cuts could boost growth and liquidity, lifting equities, risk assets, and crypto in the short term.
Could provide an initial confidence boost to markets if investors perceive easier money as a floor for growth.
Cons

Political alignment raises concerns about Fed independence and long-term inflation credibility.
If inflation accelerates while policy remains loose, long-term bond yields could spike, and equities could face volatility after initial optimism.
Kevin Warsh & Other Candidates (Complex / Mixed Impact)
Warsh historically leans hawkish but recent conditions may push him toward pragmatic easing.

His approach could provide credibility with moderate flexibility, balancing inflation expectations and growth.
Markets might react neutrally, favoring predictability over extremes.
Bullish vs Bearish Scenarios for Each Candidate
1. Christopher Waller
Bullish Scenario
Waller’s balanced approach allows measured rate cuts in response to slowing growth, while inflation expectations remain anchored.
Equities benefit from stability and predictability, particularly in tech, industrials, and small-caps.
Bonds stay relatively stable, with moderate yields reflecting a credible Fed policy.
Crypto enjoys liquidity support without overheating, as confidence in central bank management encourages risk-on sentiment.

Bearish Scenario
If inflation spikes unexpectedly, Waller may tighten faster than markets anticipate, causing short-term equity and crypto sell-offs.
Volatility in bond markets could increase if the Fed signals that inflation control takes precedence over growth.
Market participants may misread “cautious” signals as indecision, triggering knee-jerk reactions.

2. Kevin Hassett
Bullish Scenario
Aggressive rate cuts and dovish messaging fuel risk-on sentiment, pushing equities, crypto, and leveraged assets higher.
Lower short-term rates stimulate growth and consumer confidence, temporarily boosting market liquidity.
Investors may rotate back into equities from bonds, chasing yield and growth.

Bearish Scenario
Overly aggressive easing may erode credibility, especially if inflation continues above target.
Bonds may sell off as investors price in long-term inflation risk, increasing yields and volatility.
Crypto could experience sharp swings initial rallies could reverse quickly if markets lose faith in the Fed’s independence.

3. Kevin Warsh
Bullish Scenario
A pragmatic Warsh balances credibility with selective easing, giving markets predictable guidance.
Equities respond positively to transparency, particularly in sectors sensitive to interest rates like financials and growth tech.
Bonds benefit from stable yields as inflation expectations remain anchored.

Bearish Scenario
If Warsh leans hawkish unexpectedly, markets could interpret tightening as growth suppression, causing equity and crypto drawdowns.
Mixed messaging during the transition could increase volatility across all asset classes until clarity emerges.
Market Implications Across Candidates
U.S. Equities

Waller: steady support and lower volatility.
Hassett: short-term bullish, potentially volatile if inflation expectations spike.
Warsh: neutral-to-positive, dependent on messaging clarity.
Bonds
Waller: stable, predictable yields.
Hassett: short-term rates drop; long-term yields could rise on inflation concerns.
Warsh: stable if markets trust his communication; otherwise, moderate volatility.

Crypto (Bitcoin, Ethereum, etc.)
Waller: supported but not overheated, benefiting from predictable liquidity.
Hassett: initial rallies, but risk of sharp reversals if credibility falters.
Warsh: neutral; benefits from market clarity, but vulnerable to hawkish surprises.

Bottom Line: My Stance
Christopher Waller represents the most balanced and pragmatic approach for the current and anticipated macro environment.
Slow, methodical easing supports growth while maintaining inflation credibility.
Avoids extremes that could destabilize bonds or create crypto bubbles.
Supports a predictable policy backdrop, which is constructive for equities, bonds, and crypto alike.

While Hassett might ignite short-term rallies and Warsh offers nuanced credibility, Waller’s measured and flexible approach is most aligned with both economic fundamentals and market stability, making him the candidate best suited to navigate a volatile and uncertain macro landscape.